Island_Reversals - Island Reversals 08:43:13 AM PST by...

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Island Reversals 03/13/02 08:43:13 AM PST by Andrew Hetherington Every now and again you see this style of pattern, an Island Reversal. Although, it is not a major reversal pattern it does have temporary trend implications that can be profitable for trading. Security: ADRX Position: N/A The important point to remember when trading this pattern is to be nimble. The trend can change quickly. These are created by gaps, so volatility is prevalent. Many technicians discuss gaps but aren't able to correctly identify them. In this example in Figure 1 we have an exhaustion gap on the downside. Then it consolidates for 5 days before having a breakaway gap on the upside thus creating the island. The first gap is the exhaustion gap. We see ADRX bottom out with a huge spike of almost 16 million shares, while closing at $34.90 way off of the bottom that day at $31.13. This gave every indication that the bottom was in. Figure 1: Daily chart for ADRX.
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This note was uploaded on 04/14/2010 for the course FINANCE fnce 305 taught by Professor Proftujun during the Spring '10 term at Singapore Management.

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Island_Reversals - Island Reversals 08:43:13 AM PST by...

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